WHAT'S HOT?

Introductory Period of Employment

Dec 13, 2010

Introductory Period of Employment Versus Probationary Period Q&A

Employers that use the phrase “probationary period” to refer to their new employees’ first few months of work may find they have created enhanced job rights that they did not intend. Find out why you should use the term “introductory period” instead.

Q: We are reviewing our employee handbook and one of our managers suggested that we should not refer to the first three months of employment as the “probationary period.” Why is using this term a problem and what should we use instead?

A: Many employers require new (as well as transferred and promoted) employees to complete an introductory period of employment that allows an evaluation of their skills and compatibility with the organization and their jobs. During this period, the employee also has the opportunity to demonstrate his ability to learn the new job and to determine if he likes working in the organization. But, if you use the term “probationary period” to describe it, you may create the inference of job security once the new employee has completed the initial employment period.

The concept of a special initial employment originated with the probationary status of new hires in the union contract setting. This probationary period allows unionized organizations to terminate unsatisfactory new employees before they become eligible for the collective bargaining agreement’s job security provisions. In this context, the transition to regular status confers new job security that the employee did not previously have. Over time, many nonunion employers adopted the same idea of an initial trial period to evaluate a new hire’s performance, but without intending to convey any extra job security upon completion.

However, as courts have limited the doctrine of employment at will (allowing employers to terminate and employees to quit at any time and for any lawful reason), nonunionized employers have found that a probationary period policy may restrict their right to terminate employees who have completed the period. For example, some courts have found that an employer’s distinction between probationary employees who can be fired at will and employees who have completed the period creates an implied contract of employment.

As a result, these courts have determined that the nonprobationary employees were no longer at-will employees and thus could be terminated only for cause. In these cases, the employer often specifically reserved the right to terminate the new employees during the introductory period, but then neglected to adequately preserve the continued at-will status of employees who completed the period.

Similarly, policies that refer to “trial” periods, or that reclassify new employees as “permanent” after the completion of the period, also have been judged to give the employee greater job rights. Even just the use of the term “probationary” to describe the period, with its traditional union contract and job security implications, can undercut the employer’s right to terminate employees at will.

Therefore, your best bet is to use a term like “introductory period” which conveys that the new employee is being introduced to the organization and that both parties have the opportunity to evaluate each other. Some employers refer to this time period as a training period, orientation period, initial employment period, or even a “familiarization” period.

In addition, your introductory period policy also should contain an “at-will” statement. Many courts have determined that an employer’s introductory period policy generally will not create a contract restricting at-will employment if the policy includes a clear disclaimer that confirms the employee’s at-will status throughout all stages of employment. Also, other policies, where appropriate, should clearly explain and enforce the at-will relationship. Therefore, to preserve your right to terminate at any time, make sure your policy statements contain the prominent assertion that employment is always at-will.

Do you have any salary range topics you would like to see covered here on Compensation Today? Write us a comptoday@payscale.com.

Are you doing a salary review or compensation benchmarking project? PayScale provides up-to-date, external salary market data you can use right now. And, it is specific to the education, skills set and experience your employees. Give a PayScale demo a try.